Update Apple has been awarded control of the domain iTunes.co.uk, even though it was registered before the Mac maker announced its online music service.
The decision by Nominet-appointed expert Claire Milne, a telecoms consultant, puts the UK registry in a difficult position where it is deciding cases for businesses despite prior rights and possibly against the law of the land.
iTunes.co.uk’s orginal owner, Benjamin Cohen, has vowed to fight on, threatening to appeal the case through Nominet or, if necessary, the High Court.
Only last month, Nominet ruled that Game.co.uk should be handed over by game consultant Gareth Sumpter to Game plc. That decision - due to go to appeal next month - raised the worrying possibility that large companies would be encouraged to sue smaller competitors online. For a few thousand pounds, large companies may be able to get hold of domains potentially worth tens or hundreds of thousands of pounds.
With the iTunes decision, a smaller company holding prior rights on a domain (in this case CyberBritain), has for a second time lost out to a larger company. iTunes.co.uk was registered in November 2000, and redirected to a music search engine on CyberBritain. Apple only launched its UK service in June last year - four years later. Nevertheless Nominet expert Milne found that: "On the balance of probabilities, I find that the Domain Name, in the hands of the Respondent, is an Abusive Registration on the grounds of its use in a manner taking unfair advantage of, and being unfairly detrimental to, the Rights of the Complainant."
The full decision is not available yet. But it would appear that the long-held notion of prior rights has been set aside in Nominet's most recent domain resolution rules. Has the UK registry become corporate friendly?
The logic that will no doubt be strenuously put forward by intellectual property lawyers is that if someone with a similar domain to a (subsequent) well-known service then uses the knock-on effect to benefit financially, then they are guilty of using that registration abusively, and the domain should be handed over.
This is a dangerous logic however. If a company builds, say, a pedestrian shopping centre and subsequently causes the price of commercial properties in that area to rocket, that company is not entitled to take over those properties just because they have benefitted.
And it would appear that UK law also stands by this position. Earlier this month, the High Court threw out a case against Phone4U.co.uk by high-street mobile company Phones4U.
The owner of Phone4U.co.uk, Abby Heykali, was found not guilty of trade mark infringement or passing off. He said: "I am relieved this is all over. I registered phone4u.co.uk in August 1999 long before I heard of Phones 4u. I have always traded honestly and attract customers because of my low prices, not because they think I am anything to do with Phones 4u."
His law firm, Bird & Bird, said: "The case demonstrates the difficulty a company can face if they choose a name which lacks distinctive character. They cannot prevent other traders from using similar names. Had there been evidence of people being deceived we would have advised our clients to change the name of the website. Caudwell was unable to show that internet purchasers were confused at the point of purchasing from our clients."
The case is strikingly similar to both Game.co.uk and iTunes.co.uk and Nominet finds itself ruling twice against the stated views of the UK legal system.
The owner of iTunes.co.uk, Benjamin Cohen, has not missed the point. "I must admit that we were not expecting this decision by Nominet's appointed expert. Apple chose to launch the UK brand of 'itunes' within the UK with the knowledge that we had owned the name for three years before their US launch and four years before their launch within the UK," he said.
"We now face two decisions, whether to appeal to Nominet directly or refer the matter to the High Court. Both of these options are expensive and are not necessarily within the means of a small business. However, the recent High Court victory of Phone4U.co.uk against the major retailer, Phones4U - owned by the Caudwell Group - leads me to think that our case may be extremely strong."
Nominet's solictor Edward Phillips has been in touch confirming the decision by independent expert Claire Milne, and urging us to not draw conclusions until the full decision is published.
"In this case the Expert explains that the finding of abusive registration is made, in part, because of the use of the name. The decision describes the sequence of events in relation to the domain name, which you may find informative."
He also stressed the experts' independence from Nominet. "The decisions are not made by Nominet UK, they are made by the Independent Experts and I can assure you that the Experts truly are independent. The DRS staff and I never discuss with the Experts how we want a case to go, do not edit the decisions or recommend changes to the Experts when the decisions come back, and go to great lengths to ensure our neutrality. Equally we do not comment on published decisions, either to endorse or criticise."
As for the apparent conflict with the High Court in the Phone4U.co.uk case, Phillips makes the point: "The Experts bear the general law in mind, but the basis that they are making their decisions on are different to a normal civil law case. In a civil law case the cause of action will be 'passing off' or registered trade mark infringement: in the DRS the Expert is considering the narrower question of (a) does the Complainant have rights and (b) is the registration or use of the name 'abusive'. This distinction has always been there, and arises because the DRS simply solves a dispute under the contract of registration, not a larger problem, as the courts seek to."®